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The range of compensation is wide, ie. there is a lot of income inequality among Bay Area software developers. I’d estimate Google, Apple, Facebook alone have a five-digit number of employees or former employees who were there early enough to afford a multi-million dollar home, or who get paid enough now to afford such a house.

There are also some other factors which tend to push up Bay Area home prices. Due to building restrictions, the market for homes is undersupplied. Due to prop 13 and the nice weather, people are less likely to leave even if they don’t need to be here for work anymore. So the market for homes is not very liquid and prices are sort of a one-way ratchet (barring economic meltdown). Really, only the top 10-20% or so of earners are in competition to buy a single family home at all in the area, and that number is shrinking.

Consider a random engineer at Google who bought their home seven years ago for $1M and it’s now worth $2M, while they paid off the mortgage with their RSUs. This person is no bigwig, but they might get approved for a mortgage on a $5M house and afford the down payment no problem.